Sea-borne iron ore fell on bearish sentiments: KATM Exclusive

30 October 2017

Bearish sentiments further supported by the fall in Chinese futures brought the spot iron ore prices in the sea-borne market to around $60 per tonne (CFR China) on Friday i.e. 27^th October. Metal Bulletin’s 62% Fe Iron Ore Index closed for the week at $60.08 per tonne CFR Qingdao. The benchmark was at $61.47 per tonne on 26^th October.

Seemingly, the buyer sentiments were hit by consecutive declines in futures prices. Futures have been on correction for the past few days as Chinese steel mills curbed production, further denting demand for iron ore and other raw materials, and prompting trader sentiments to turn bearish.

Chinese futures fell across the board

In steel, the rebar futures fell again as the most active rebar contract on the Shanghai Futures Exchange closed down 2.4% to 3,577 yuan a tonne. The contract ended the week 1.6% lower, its second weekly decline.

Moreover, at Shanghai, hot rolled coil futures dropped 3.6 percent to 3,834 yuan a tonne by close. It fell for a second week, down by 3.5%, posting the biggest weekly loss in two months.

Most traded contract for iron ore at Dalian Commodity Exchange declined 5.6% to 428 yuan ($64.33) a tonne by close after earlier hitting 426.5 yuan a tonne, the lowest since October 12. It ended the week 3% lower.

Sluggish near term fundamentals

Fundamentals in terms of both supply and demand stood weak and overall market is expected to see no obvious improvement in the near term, as China moved aggressively curbed steel production to achieve the target of cutting steel capacity by 50 million tonnes.

Transactions showed little movement as most of the traders expressed that steel mills have obvious desire to depress spot prices and their purchases are mainly based on real demand, showing no demand for the stock replenishment.